-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AKINRjs7nyk2EwB9PzpcwgLb2IcHqMP/YwdMOFjwGLvRfkbwefhTQb/9b840jARV 4axOTTu+PSwZta0j1rArzA== 0000864906-97-000006.txt : 19971119 0000864906-97-000006.hdr.sgml : 19971119 ACCESSION NUMBER: 0000864906-97-000006 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19971118 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUNAR CORP CENTRAL INDEX KEY: 0000864906 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 391200501 STATE OF INCORPORATION: WI FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-40469 FILM NUMBER: 97723605 BUSINESS ADDRESS: STREET 1: 313 W BELTLINE HIGHWAY CITY: MADISON STATE: WI ZIP: 53713 BUSINESS PHONE: 6082742663 MAIL ADDRESS: STREET 1: 313 WEST BELTLINE HIGHWAY CITY: MADISON STATE: WI ZIP: 53713 S-3 1 FORM S-3 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on November 18, 1997 Registration No. 333- =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 LUNAR CORPORATION (Exact Name of Registrant as Specified in Its Charter) Wisconsin (State or Other Jurisdiction of Incorporation or Organization) 39-1200501 (I.R.S. Employer Identification Number) 313 West Beltline Highway Madison, Wisconsin 53713 Telephone: (608) 274-2663 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Richard B. Mazess, President Lunar Corporation 313 West Beltline Highway Madison, Wisconsin 53713 Telephone: (608) 274-2663 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) Copy to: Jim L. Kaput Sidley & Austin One First National Plaza Chicago, Illinois 60603 Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this form is a post-effective amendment filed pursuant to Rule 462 under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE Title of Shares Amount Proposed Proposed Amount of To Be To Be Maximum Maximum Registration Registered Registered Aggregate Aggregate Fee Price Offering Per Unit Price (1) - ---------------------------------------------------------------------- Common 250,000(1) $21.75(2) 4,990,140(2) $1,512.16 Stock, par value $.01 per share - ---------------------------------------------------------------------- (1) Also registered hereby are such additional and indeterminate number of shares as may become issuable because of the provisions of the Lunar Corporation Amended and Restated Stock Option Plan relating to adjustments for changes resulting from stock dividends, stock splits and similar changes. (2) Estimated solely for the purpose of calculating the Registration Fee and, pursuant to Rule 457(h) under the Securities Act of 1933, based upon the exercise price for shares subject to outstanding options and the average of the high and low sale prices of Common Stock of the Registrant on The Nasdaq Stock Market on November 13, 1997 for all other shares. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. SUBJECT TO COMPLETION, DATED NOVEMBER 18, 1997 PROSPECTUS 250,000 Shares LUNAR Common Stock __________________ This Prospectus relates to up to 250,000 shares of Common Stock, par value $.01 per share ("Common Stock"), of Lunar Corporation, a Wisconsin corporation (the "Company" or "Lunar"), which may be offered and sold to permitted transferees of participants ("Participants") in the Lunar Corporation Amended and Restated Stock Option Plan (the "Plan"), pursuant to nonqualified stock options ("Stock Options") granted to such Participants under the Plan. Upon the approval of the committee responsible for administration of the Plan (the "Committee"), some or all of a Participant's Stock Option may be transferred by such Participant pursuant to a domestic relations order. Each transfer must be made in accordance with the grant documents specifying the terms and conditions for transferring such Stock Option. This Prospectus also relates to the offer and sale of Common Stock pursuant to such Stock Option to the beneficiaries of such permitted transferees, or the executors or administrators of their estates, or other persons duly authorized by law to administer the estate or assets of such persons. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. As of the date of this Prospectus, all Stock Options granted under the Plan have had an exercise price equal to 100% of the fair market value of a share of Common Stock on the date of grant. Upon transfer, a Stock Option continues to be governed by and subject to the terms and limitations of the Plan and the relevant grant, including provisions relating to exercise price. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. The date of this Prospectus is ____________, 1997 TABLE OF CONTENTS Page The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . 2 Description of the Plan and the Stock Options. . . . . . . . . . . . . . 4 Certain Federal Income Tax Consequences. . . . . . . . . . . . . . . . . 6 Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . 7 Incorporation of Certain Documents By Reference. . . . . . . . . . . . . 7 THE COMPANY Lunar develops and sells x-ray and ultrasound bone densitometers for the diagnosis and monitoring of osteoporosis and other metabolic bone diseases. Lunar also develops and sells medical imaging equipment used by orthopedists and radiologists for imaging extremities. Lunar is a Wisconsin corporation, its principal executive offices are located at 313 West Beltline Highway, Madison, Wisconsin 53713 and its telephone number is (608) 274-2663. USE OF PROCEEDS The Company intends to use the net proceeds from the sale of the Common Stock for general corporate purposes. DESCRIPTION OF CAPITAL STOCK The authorized capital stock of the Company consists of 25,000,000 shares of Common Stock, par value $.01 per share. At September 30, 1997, 8,737,535 shares of Common Stock were outstanding and stock options to purchase 1,059,945 shares of Common Stock were outstanding. The following summary description of the capital stock of the Company is qualified in its entirety by reference to the Articles of Incorporation and the By-Laws of the Company and to the Wisconsin Business Corporation Law (the "WBCL"). COMMON STOCK Holders of Common Stock are entitled to one vote for each share held on all matters submitted to a vote of shareholders. Holders of Common Stock do not have cumulative voting rights in the election of directors and have no preemptive, subscription or redemption rights. All outstanding shares of Common Stock are, and those offered hereby will be, validly issued, fully paid and nonassessable, except for certain statutory liabilities which may be imposed by Section 180.0622 of the WBCL for unpaid employee wages. Section 180.0622 of the WBCL provides that shares held by shareholders of corporations incorporated in Wisconsin may be assessed up to their par value to satisfy obligations to employees for services rendered, but not exceeding six months' service in the case of any individual employee. The par value of the Company's Common Stock is $.01 per share. Holders of Common Stock are entitled to suchdividends as may be declared by the Board of Directors out of funds legally available therefor. Upon liquidation, dissolution or winding-up of the Company, the assets legally available for distribution to shareholders are distributable ratably among the holders of Common Stock at that time outstanding subject to prior distribution rights of creditors of the Company. CERTAIN ARTICLES OF INCORPORATION AND BY-LAWS PROVISIONS Certain provisions of the Articles of Incorporation and the By-Laws could have anti-takeover effects and may delay, defer or prevent a takeover attempt that a shareholder might consider in the shareholder's best interest. These provisions are intended to enhance the likelihood of continuity and stability in the composition of and in the policies formulated by the Board of Directors. In addition, these provisions are also intended to ensure that the Board of Directors will have sufficient time to act in what the Board of Directors believes to be the best interests of the Company and its shareholders. Classified Board of Directors. The Articles of Incorporation provide for a Board of Directors divided into three classes of directors serving staggered three-year terms. The classification of directors has the effect of making it more difficult for shareholders to change the composition of the Board of Directors in a short period of time. The Board currently has six directors. At least two annual meetings of shareholders, instead of one, will generally be required to effect a change in a majority of the Board of Directors. Number of Directors; Filling Vacancies; Removal. The Articles of Incorporation and the By-Laws provide that the Board of Directors will consist of at least six and no more than twelve members as determined by the Board. The By-Laws provide that the Board of Directors, acting by majority vote of the directors then in office, may fill any newly created directorships or vacancies on the Board of Directors except for a vacancy resulting from the removal by shareholders of a director, in which case the shareholders may fill such vacancy by the affirmative vote of eighty percent (80%) of the outstanding shares entitled to vote thereon. The Articles of Incorporation and the By-Laws provide that a director may be removed only upon the affirmative vote of eighty percent (80%) of the outstanding shares entitled to vote for the election of such directors. CERTAIN WISCONSIN BUSINESS CORPORATION LAW PROVISIONS Restrictions on Business Combinations. Section 180.1141 of the WBCL provides that a "resident domestic corporation", such as the Company, may not engage in a "business combination" with an "interested stockholder" (a person beneficially owning 10% of the voting power of the outstanding voting stock), for three years after the date (the "stock acquisition date") the interested stockholder acquired its 10% or greater interest, unless the business combination (or acquisition of 10% or greater interest) was approved before the stock acquisition date by the corporation's board of directors. After the 3-year period, a business combination that was not so approved can be consummated only if it is approved by the majority of the outstanding voting shares not held by the interested stockholder or is made at a specified formula price intended to provide a fair price for the shares held by noninterested stockholders. Control Share Voting Restrictions. Section 180.1150 of the WBCL provides that, absent a contrary provision in the Articles of Incorporation, the voting power of shares (including shares issuable upon conversion of convertible securities or upon exercise of options or warrants) of an "issuing public corporation" (generally defined as a Wisconsin corporation with at least 100 shareholders of record who are Wisconsin residents) held by any person in excess of 20% of the voting power in the election of directors is limited to 10% of the full voting power of such excess shares unless, at a special meeting of shareholders called in accordance with certain procedures, the shareholders of such corporation approve a resolution restoring full voting power to such shares. The requisite vote for approval of such resolution is the affirmative vote of a majority of the voting power represented at the meeting and entitled to vote on the subject matter. Shares of an issuing public corporation held or acquired from the issuing public corporation or acquired under an agreement entered into at a time when the issuing public corporation was not an issuing public corporation are excluded from the application of these provisions. Such provisions would not apply to the shares held by Dr. Richard Mazess, founder of the Company. Limited Liability of Directors. Under Section 180.0828 of the WBCL, directors of a corporation are not subject to personal liability to the corporation, its shareholders, or any person asserting rights on behalf thereof for damages, settlements, fees, fines, penalties or other monetary liabilities arising from breaches or failures to perform any duty resulting solely from their status as a directors, unless the person asserting liability proves that the breach or failure constituted: (I) a willful failure to deal fairly with the corporation or its shareholders in connection with a matter in which the director had a material conflict of interest, (ii) a violation of criminal law, unless the director had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful, (iii) a transaction from which the director derived an improper personal profit, or (iv) willful misconduct. These provisions pertain only to breaches of duty by directors as directors and not in any other corporate capacity, such as officers. As a result of such provisions, shareholders may be unable to recover monetary damages against directors for actions taken by them which constitute negligence or gross negligence or which are in violation of their fiduciary duties, although it may be possible to obtain injunctive or other equitable relief with respect to such actions. If equitable remedies are found not to be available to shareholders in any particular case, shareholders may not have any effective remedy against the challenged conduct. INDEMNIFICATION OF DIRECTORS AND OFFICERS Under the Company's By-Laws and the WBCL, directors and officers of the Company are entitled to mandatory indemnification from the Company against certain liabilities and expenses (a) to the extent such officers or directors are successful in the defense of a proceeding and (b) in proceedings in which the director or officer is not successful in the defense thereof, unless it is determined the director or officer breached or failed to perform such person's duties to the Company and such breach or failure constituted: (I) a willful failure to deal fairly with the Company or its shareholders in connection with a matter in which the director or officer had a material conflict of interest, (ii) a violation of criminal law, unless the director or officer had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful, (iii) a transaction from which the director or officer derived an improper personal profit, or (iv) willful misconduct. The Company's By-Laws provide that the Company may purchase and maintain insurance on behalf of an individual who is a director or officer of the Company against liability asserted against or incurred by such individual in his or her capacity as a director or officer regardless of whether the Company is required or authorized to indemnify or allow expenses to the individual against the same liability under the By-Laws. DESCRIPTION OF THE PLAN AND THE STOCK OPTIONS THE PLAN The purpose of the Plan is to provide incentives to officers, key employees and consultants of the Company and its subsidiaries and members of the Board of Directors to contribute to the success and prosperity of the Company by granting Stock Options to such persons. The maximum number of shares of Common Stock available under the Plan is 1,500,000. At the 1997 Annual Meeting of Shareholders to be held on November 21, 1997, the Shareholders will vote on a proposal to increase the number of shares available under the Plan by 500,000 shares. The Committee administers the Plan and has the authority, subject to the terms of the Plan, to establish eligibility guidelines, select officers, key employees, consultants, and non-employee directors for participation in the Plan and determine the number of shares of Common Stock subject to a Stock Option granted thereunder, the exercise price of such shares of Common Stock, the time and conditions of vesting or exercise, and all other terms and conditions of the Stock Option. Only nonqualified stock options may be granted under the Plan. The option price per share of Common Stock purchasable upon exercise of a Stock Option is 100% of the fair market value of a share of Common Stock on the date of grant of such Stock Option. The Committee determines the period of exercise of a Stock Option and whether a Stock Option will be exercisable in cumulative or non-cumulative installments or in full at any time. THE STOCK OPTIONS At the time of grant, the Committee establishes the exercise price, the expiration date and the times and installments in which the Stock Options may be exercised. As of the date of this Prospectus, all Stock Options granted under the Plan have had expiration dates ten years from the date of grant with an exercise price equal to 100% of the fair market value of a share of Common Stock on the date of grant. Such grants generally have provided that the Stock Options become exercisable in equal annual installments over the three-year or five-year period following the date of grant. If any change shall occur in or affect shares of Common Stock or Stock Options on account of a merger, reorganization, stock dividend, stock split or similar changes, the Committee shall make adjustments in, among other things, (I) the number of shares exercisable under each Stock Option and (ii) the exercise price or the unexercised portion of each Stock Option. TRANSFERABILITY The Plan provides that Stock Options are generally not transferable by a Participant except by will or the laws of descent and distribution and are exercisable during the Participant's lifetime only by the Participant. Notwithstanding the foregoing, under certain circumstances, the Committee may consent to the transfer or transferability of any particular Stock Option in the manner approved by the Committee. The Committee has determined to allow the transfer of certain Stock Options pursuant to a domestic relations order. Any such permitted transferee of a Participant's Stock Options shall be referred to herein as a "Stock Option Transferee" and such Participant shall be referred to herein as a "Participant Transferor." This Prospectus relates to up to 250,000 shares of Common Stock of the Company which may be offered and sold to Stock Option Transferees pursuant to Stock Options that may be transferred as described in the immediately preceding paragraph. This Prospectus also relates to the offer and sale of Common Stock pursuant to such Stock Options to the beneficiaries of such Stock Option Transferees or the executors or administrators of their estates, or other persons duly authorized by law to administer the estate or assets of such persons. Upon transfer to a Stock Option Transferee, a Stock Option is governed by and subject to the terms and limitations of the Plan and the relevant grant, as such grant may be amended by the Committee in consenting to a transfer of the Stock Option, and, subject to any such amendment, the Stock Option Transferee is entitled to the same rights as the Participant Transferor thereunder, as if no transfer had taken place. Accordingly, the rights of the Stock Option Transferee are subject to the terms and conditions of the original grant to the Participant Transferor, as amended, including provisions relating to expiration date, exercisability, exercise price and forfeiture. For information regarding the terms of a particular Stock Option grant, Stock Option Transferees may contact the Corporate Secretary at the Company's principal executive offices. Once a Stock Option has been transferred to a Stock Option Transferee, it may not be subsequently transferred by the Stock Option Transferee except with the consent of the Committee or by will or the laws of descent and distribution. EXERCISE OF STOCK OPTIONS BY STOCK OPTION TRANSFEREES A Stock Option may be exercised by a Stock Option Transferee at any time from the time first set by the Committee in the original grant to the Participant Transferor until the close of business on the expiration date of the Stock Option, or the earlier date on which the Stock Option terminates due to the Participant Transferor's termination of employment or service as director, as discussed below. Stock Options generally become exercisable in equal annual installments over the three-year or five-year period following the date of grant. The exercise price of the shares as to which Stock Options are exercised shall be paid to the Company at the time of exercise in cash. A Stock Option will be deemed exercised on the date the Lunar Corporate Secretary's office has received written notice of exercise of the Stock Option signed by the Stock Option Transferee specifying the number of shares of Common Stock with respect to the Stock Option being exercised (accompanied by a check in satisfaction of the exercise price). The Stock Option shares will generally be transferred to the Stock Option Transferee as of the day following the date that (i) the above conditions have been met, (ii) the funds paid by the Stock Option Transferee in satisfaction of the exercise price have been received by the Company, and (iii) the Company has received confirmation that all tax withholding obligations have been satisfied. Any required income tax withholding must be satisfied by the Stock Option Transferee as discussed below under the heading "CERTAIN FEDERAL INCOME TAX CONSEQUENCES". Once the exercise is completed as described above, stock certificates for the appropriate number of shares will be delivered to the Stock Option Transferee or his or her estate or beneficiaries, or such shares shall otherwise be delivered in such manner as the person(s) entitled thereto may direct. EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE Because Stock Options transferred to Stock Option Transferees continue to be governed by the terms of the Plan and the original grant, their exercisability continues to be affected by the Participant Transferor's employment or service status. If a Participant Transferor terminates employment or service with the Company for any reason other than death or retirement after age 60, all outstanding unexercised Stock Options granted to such Participant Transferor, including those held by a Stock Option Transferee, may be exercised during the 30-day period following the date of termination of employment or service, but only to the extent exercisable on such date and in no event after the expiration dates of such Stock Options. If a Participant Transferor terminates employment or service by reason of death or retirement after age 60, all outstanding unexercised Stock Options granted to such Participant Transferor, including those held by a Stock Option Transferee, may be exercised during the one-year period following the date of death or date of termination of employment or service, but only to the extent exercisable on such date, and in no event after the expiration dates of such Stock Options. If a Participant Transferor dies during the 30-day period following termination of employment or service for any reason other than retirement after age 60, or if a Participant Transferor dies during the one-year period following termination of employment or service by reason of retirement after age 60, all outstanding unexercised Stock Options granted to such Participant Transferor, including those held by a Stock Option Transferee, may be exercised during the one-year period following the date of death, but only to the extent exercisable on such date, and in no event after the expiration dates of such Stock Options. The Company has no obligation to notify any Stock Option Transferee of the termination of employment of the Participant Transferor. CHANGE IN CONTROL In the event of a change in control of the Company, any Stock Option not previously exercisable in full will become fully exercisable. As more fully set forth in the Plan, a change in control generally is the acquisition, subject to certain exceptions, by any person of beneficial ownership of 50% or more of the Common Stock, a change in the majority of the Board of Directors or approval by the shareholders of a reorganization, merger, consolidation, or sale of all or substantially all of the assets of the Company unless certain conditions are satisfied. CERTAIN FEDERAL INCOME TAX CONSEQUENCES Prior to making a transfer of a Stock Option, a Participant should consult with his or her personal tax advisors concerning the possible federal, state and local income and other tax consequences of such a transfer. A Stock Option Transferee should consult with his or her personal tax advisors concerning the possible federal, state and local income and other tax consequences of the exercise of a Stock Option. The federal income tax consequences of a transfer to a former spouse of a Stock Option pursuant to a domestic relations order and of the exercise of the Stock Option are discussed below. State and local income tax consequences are not addressed herein. INCOME TAX CONSEQUENCES FOR PARTICIPANT TRANSFEROR The Company has been advised by its tax counsel that a Participant who transfers a Stock Option to a Stock Option Transferee pursuant to a domestic relations order will not recognize income at the time of the transfer. As discussed in the following paragraph, where the Participant Transferor and the Stock Option Transferee both are domiciled in a community property state, such as Wisconsin, the Stock Option Transferee and not the Participant Transferor will recognize ordinary income at the time the Stock Option Transferee exercises the Stock Option. INCOME TAX CONSEQUENCES FOR STOCK OPTION TRANSFEREE Tax counsel has also advised the Company that, where the Participant Transferor and the Stock Option Transferee are both domiciled in a community property state, such as Wisconsin, upon exercise of a Stock Option that was transferred pursuant to a domestic relations order, the Stock Option Transferee will recognize ordinary income in an amount equal to the excess of the fair market value of the shares purchased on the date of exercise (which will not necessarily be equal to the price at which such shares are sold, even if sold on the same day as exercise) over the exercise price. If either the Participant Transferor or the Stock Option Transferee is not domiciled in a community property state, the Participant Transferor and Stock Option Transferee should consult their personal tax advisors. The Company will generally be entitled to claim a federal income tax deduction at such time and in the same amount that the Stock Option Transferee recognizes ordinary income. The Internal Revenue Service has ruled in private letter rulings that the amount required to be included in income by the Stock Option Transferee is subject to Federal Income Contributions Act (FICA) and income tax withholding. INCOME TAX CONSEQUENCES UPON THE SUBSEQUENT SALE OF STOCK If shares acquired upon exercise of a Stock Option that was transferred pursuant to a domestic relations order are later sold or exchanged, then the difference between the sale price and the Stock Option Transferee's tax basis for the shares will generally be taxable as long-term or short-term capital gain or loss (assuming that the stock is a capital asset of the taxpayer) depending upon whether the stock has been held for more than 18 months after the exercise date. The tax basis for the shares in the hands of the Stock Option Transferee would be the exercise price for the Stock Option plus the amount of income recognized by the Stock Option Transferee at the time of exercise. LEGAL MATTERS The legality of the Securities offered hereby will be passed upon for the Company by Charles V. Sweeney, Corporate General Counsel. EXPERTS The consolidated financial statements and schedule of Lunar Corporation as of June 30, 1997 and 1996 and for each of the years in the three-year period ended June 30, 1997 contained in Lunar's Annual Report on Form 10-K for the year ended June 30, 1997 have been incorporated by reference herein in reliance upon the reports of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. To the extent that KPMG Peat Marwick LLP audits and reports on financial statements of the Company issued at future dates, and consents to the use of their reports thereon, such financial statements also will be incorporated by reference herein in reliance upon their reports and said authority. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). The Company has filed with the Commission a registration statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the shares of Common Stock offered hereby. This Prospectus, which constitutes a part of the Registration Statement, does not contain all information set forth in the Registration Statement and reference is hereby made to the Registration Statement and the exhibits thereto for further information with respect to the Company and the shares of Common Stock offered hereby. Such reports, proxy statements, Registration Statement and exhibits and other information omitted from this Prospectus can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at its Northeast Regional Office located at 7 World Trade Center, Suite 1300, New York, New York 10048 and Midwest Regional Office located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission at http://www.sec.gov. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents heretofore filed with the Commission by the Company under the Exchange Act are incorporated herein by reference: (a) the Annual Report of the Company on Form 10-K for the year ended June 30, 1997; (b) the Quarterly Report of the Company on Form 10-Q for the quarter ended September 30, 1997; and the description of the Common Stock contained in the Company's Registration Statement on Form 8-A filed under the Exchange Act, including any amendment or report filed for the purpose of updating such description. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Common Stock contemplated hereby shall be deemed to be incorporated by reference into this Prospectus and to be made a part hereof from the respective dates of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of the Registration Statement and this Prospectus to the extent that a statement contained herein or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of the Registration Statement or this Prospectus. Copies of the above documents (other than exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents) may be obtained upon written or oral request without charge from the Company, 313 West Beltline Highway, Madison, Wisconsin 53713 (telephone number (608) 274-2663), Attention: Investor Relations. PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The following table sets forth the expenses in connection with the issuance and distribution of the securities being registered, other than underwriting discounts and commissions. All of the amounts shown are estimated, except the SEC registration fee. SEC registration fee. . . . . . . . . . 1,512.16 Legal fees and expenses . . . . . . . . 10,000.00 Fees of accountants . . . . . . . . . . 2,000.00 ---------- 13,512.16 ========== Item 15. Indemnification of Directors and Officers. Under Article IX of the Company's By-Laws, directors and officers of the Company are entitled to mandatory indemnification from the Company against certain liabilities and expenses (a) to the extent such officers or directors are successful in the defense of a proceeding and (b) in proceedings in which the director or officer is not successful in the defense thereof, unless it is determined the director or officer breached or failed to perform such person's duties to the Company and such breach or failure constituted: (I) a willful failure to deal fairly with the Company or its shareholders in connection with a matter in which the director or officer had a material conflict of interest, (ii) a violation of criminal law, unless the director or officer had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful, (iii) a transaction from which the director or officer derived an improper personal profit, or (iv) willful misconduct. The Company's By-Laws provide that the Company may purchase and maintain insurance on behalf of an individual who is a director or officer of the Company against liability asserted against or incurred by such individual in his or her capacity as a director or officer regardless of whether the Company is required or authorized to indemnify or allow expenses to the individual against the same liability under the By-Laws. The Wisconsin Business Corporation Law contains provisions for mandatory indemnification of directors and officers against certain liabilities and expenses that are similar to those contained in the Company's By-Laws. Under Section 180.0828 of the Wisconsin Business Corporation Law, directors of the Company are not subject to personal liability to the Company, its shareholders or any person asserting rights on behalf thereof for damages, settlements, fees, fines, penalties or other monetary liabilities arising from breaches or failures to perform any duty resulting solely from their status as such directors, except in circumstances paralleling those in clauses (I) through (iv) in the preceding paragraph. These provisions pertain only to breaches of duty by directors as directors and not in any other corporate capacity, such as officers. As a result of such provisions, shareholders may be unable to recover monetary damages against directors for actions taken by them which constitute negligence or gross negligence or which are in violation of their fiduciary duties, although it may be possible to obtain injunctive or other equitable relief with respect to such actions. If equitable remedies are found not to be available to shareholders in any particular case, shareholders may not have any effective remedy against the challenged conduct. Item 16. Exhibits. A list of exhibits included as part of this Registration Statements is set forth in the Exhibit Index appearing elsewhere herein and is incorporated herein by reference. Item 17. Undertakings. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(I) and (a)(1)(ii) do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Madison, State of Wisconsin, on this 14th day of November, 1997. LUNAR CORPORATION By: /s/ Richard B. Mazess Richard B. Mazess, Ph.D. President POWER OF ATTORNEY KNOW ALL PEOPLE BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard B. Mazess and Robert A. Beckman, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated and on the dates indicated. Name Title Date /s/ Richard B. Mazess President and November 14, 1997 Richard B. Mazess, Ph.D. Director (Principal Executive Officer) /s/ Robert A. Beckman Vice President of November 14, 1997 Robert A. Beckman Finance (Principal Financial and Accounting Officer) /s/ Samuel E. Bradt Director November 14, 1997 Samuel E. Bradt /s/ John W. Brown Director November 3, 1997 John W. Brown /s/ Reed Coleman Director November 4, 1997 Reed Coleman /s/ John J. McDonough Director November 14, 1997 John J. McDonough /s/ Malcolm R. Powell Director November 3, 1997 Malcolm R. Powell, M.D. EXHIBIT INDEX Exhibit Number 4.1 Articles of Amendment and Restated Articles of Incorporation of Lunar Corporation, as amended. (1) (Exhibit 3.1) 4.2 By-laws of Lunar Corporation. (2) (Exhibit 3.2) *5 Opinion of Charles V. Sweeney regarding the legality of the securities being registered. *8 Opinion of Sidley & Austin regarding certain tax matters. *23.1 Consent of KPMG Peat Marwick LLP. *23.2 Consent of Charles V. Sweeney. (included in Exhibit 5) *23.3 Consent of Sidley & Austin. (included in Exhibit 8) *24 Powers of Attorney. (included elsewhere herein) *99.1 Lunar Corporation Amended and Restated Stock Option Plan. *99.2 Form of Stock Option Agreements. *filed herewith (1) Incorporated by reference to exhibits filed with Registrant's Annual Report on Form 10-K for the year ended June 30, 1996 (File No. 0-18643). Parenthetical references to exhibit numbers are to the exhibit numbers on the Form 10-K. (2) Incorporated by reference to exhibits filed with Registrant's Form 10-Q for the quarter ended December 31, 1996 (File No. 0-18643). Parenthetical references to exhibit numbers are to the exhibit numbers on the Form 10-Q. EX-5 2 OPINION OF CHARLES V. SWEENEY November 13, 1997 LUNAR Corporation 313 West Beltline Highway Madison, WI 53713 Re: LUNAR Corporation 250,000 Shares of Common Stock, $.01 par value per share Ladies and Gentlemen: I am Wisconsin counsel to LUNAR Corporation, a Wisconsin corporation (the "Company"). I am familiar with the Registration Statement on Form S-3 (the "Registration Statement") filed by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended, relating to the registration of 250,000 shares of Common Stock, $.01 par value per share (the "Shares"), of the Company to be issued to permitted transferees of participants in the LUNAR Corporation Amended and Restated Stock Option Plan (the "Plan"). I am also familiar with the Articles of Amendment and Restated Articles of Incorporation and the By-laws of the Company and the proceedings to date with respect to the proposed issuance and sale of the Shares. In this connection, I have examined originals or copies of originals certified to my satisfaction, of such documents, certificates and records, have examined such questions of law and have satisfied myself as to such matters of fact as I have considered relevant and necessary as a basis for the opinions set forth herein. I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures, the legal capacity of all natural persons and the conformity with the original documents of any copies thereof submitted to me for my examination. Based on the foregoing, I am of the opinion that: 1. The Company is duly incorporated and validly existing under the laws of the State of Wisconsin. 2. The Shares will, when certificates representing the Shares shall have been duly executed, countersigned and registered and delivered against receipt by the Company of the consideration provided in the Plan, be legally issued, fully paid and nonassessable, except to the extent that such Shares are assessable as provided in Section 180.0622 of the Wisconsin Business Corporation Law. This opinion is limited to the laws of the State of Wisconsin. I do not find it necessary for the purposes of this opinion to cover, and accordingly I express no opinion as to, the application of the securities or blue sky laws of the various states to the issuance and sale of the Shares. I hereby consent to the filing of this opinion as an Exhibit to the Registration Statement and to all references to me included in or made a part of the Registration Statement. Very truly yours, /s/ Charles V. Sweeney Charles V. Sweeney Corporate General Counsel EX-8 3 OPINION OF SIDLEY & AUSTIN REGARDING CERTAIN TAX MATTERS [Letterhead of Sidley & Austin] November 11, 1997 Lunar Corporation 313 West Beltline Highway Madison, Wisconsin 53713 Ladies and Gentlemen: We refer to the Registration Statement on Form S-3 (the "Registration Statement"), including the prospectus (the "Prospectus") contained therein, filed by Lunar Corporation, a Wisconsin corporation (the "Company"), with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration of 250,000 Common Shares, $.01 par value, of the Company which may be offered and sold to permitted transferees of participants in the Lunar Corporation Amended and Restated Stock Option Plan. For purposes of this opinion we have also assumed, with your consent, the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of all natural persons and the conformity with original documents of all copies submitted to us for our examination. In rendering the opinion expressed below, we have considered the applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), regulations promulgated thereunder by the United States Treasury Department (the "Regulations"), pertinent judicial authorities, rulings of the Internal Revenue Service and such other authorities as we have considered relevant. It should be noted that the Code, the Regulations and such judicial decisions, administrative interpretations and other authorities are subject to change at any time and, in some circumstances, with retroactive effect, and any such change could affect the opinions stated herein. Based upon and subject to the foregoing, it is our opinion that the statements under the caption "Certain Federal Income Tax Consequences" in the Prospectus, to the extent that they constitute matters of law or legal conclusions, are correct in all material respects. We assume no obligation to update or supplement this letter to reflect any facts or circumstances which may hereafter come to our attention with respect to the opinions expressed above, including any changes in applicable law which may hereafter occur. We hereby consent to the filing of this letter as an exhibit to the Registration Statement and to all references to our Firm included in or made a part of the Registration Statement. Very truly yours, Sidley & Austin EX-23.1 4 CONSENT OF KPMG PEAT MARWICK LLP Consent of KPMG Peat Marwick LLP The Board of Directors Lunar Corporation: We consent to incorporation by reference in the registration statement on Form S-3 of Lunar Corporation of our reports dated August 2, 1997 relating to the consolidated balance sheets of Lunar Corporation and subsidiaries as of June 30, 1997 and 1996, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three-year period ended June 30, 1997, and related schedule, which reports appear in the June 30, 1997 annual report on Form 10-K of Lunar Corporation. KPMG Peat Marwick LLP Chicago, Illinois November 13, 1997 EX-99.1 5 LUNAR CORPORATION AMENDED AND RESTATED STOCK OPTION PLAN LUNAR CORPORATION AMENDED AND RESTATED STOCK OPTION PLAN 1. PLAN. To provide incentives to officers, key employees and consultants of Lunar Corporation (the "Company"), its subsidiaries, and any other entity (collectively "subsidiaries") designated by the Board of Directors of the Company(the "Board"), and members of the Board to contribute to the success and prosperity of the Company, based upon the ownership of the common stock, par value $.01, of the Company ("Common Stock"), the Committee hereinafter designated, may grant nonqualified stock options to officers, key employees, consultants and eligible members of the Board on the terms and subject to the conditions stated in this Plan. 2. ELIGIBILITY. Officers, key employees and consultants of the Company and its subsidiaries and members of the Board who are not employees of the Company ("non-employee directors") shall be eligible, upon selection by the Committee, to receive stock options as the Committee, in its discretion, shall determine. 3. SHARES ISSUABLE. The maximum number of shares of Common Stock to be issued after the effective date of this Plan pursuant to all grants of stock options hereunder shall be 1,000,000, subject to adjustment in accordance with Section 5. Shares of Common Stock subject to a stock option granted hereunder, which are not issued by reason of the expiration, cancellation or other termination of such stock option, shall again be available for future grants of stock options under this Plan. Shares of Common Stock to be issued may be authorized and unissued shares of Common Stock, treasury stock, or a combination thereof. To the extent required by Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and the rules and regulations thereunder, the maximum number of shares of Common Stock with respect to which options may be granted during any calendar year to any person shall be 100,000, subject to adjustment as provided in Section 5. 4. ADMINISTRATION OF THE PLAN. This Plan shall be administered by a committee designated by the Board (the "Committee") consisting of two or more members of the Board, each of whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and an "outside director" within the meaning of Section 162(m) of the Code. The Committee shall, subject to the terms of this Plan, establish eligibility guidelines, select officers, key employees, consultants and non-employee directors for participation in this Plan and determine the number of shares of Common Stock subject to a stock option granted hereunder, the exercise price for such shares of Common Stock, the time and conditions of vesting or exercise and all other terms and conditions of the stock option, including, without limitation, the form of the option agreement. The Committee may establish rules and regulations for the administration of the Plan, interpret the Plan and impose, incidental to the grant of a stock option, conditions with respect to the grant or award of stock options or competitive employment or other activities not inconsistent with or conflicting with this Plan. All such rules, regulations and interpretations relating to this Plan adopted by the Committee shall be conclusive and binding on all parties. All grants of stock options under this Plan shall be evidenced by written agreements between the Company and the optionees, and no such grant shall be valid until so evidenced. 5. CHANGES IN CAPITALIZATION. Appropriate adjustments shall be made by the Committee in the maximum number of shares to be issued under the Plan and the maximum number of shares which are subject to any stock option granted hereunder, and the exercise price therefor, to give effect to any stock splits, stock dividends and other relevant changes in the capitalization of the Company occurring after the effective date of this Plan (which shall not include the sale by the Company of shares of Common Stock or securities convertible into shares of Common Stock). 6. EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted to the shareholders of the Company for approval and, if approved, shall become effective on the date thereof. This Plan shall terminate ten years after it becomes effective unless terminated prior thereto by action of the Board. No further grants shall be made under this Plan after termination, but termination shall not affect the rights of any optionee under any grants made prior to termination. 7. AMENDMENTS. This Plan may be amended by the Board in any respect, except that no amendment may be made without shareholder approval if such amendment would (a) increase the maximum number of shares of Common Stock available for issuance under this Plan (other than as provided in Section 5) or (b) otherwise require shareholder approval. 8. EXISTING STOCK OPTIONS. Stock options granted by the Company prior to the date of shareholder approval of this Plan shall continue in effect in accordance with their terms. 9. GRANTS OF STOCK OPTIONS. Options to purchase shares of Common Stock may be granted hereunder to such eligible officers, key employees, consultants, and non-employee directors as may be selected by the Committee. 10. OPTION PRICE. The option price per share of Common Stock purchasable upon exercise of an option granted hereunder shall be determined by the Committee; PROVIDED, HOWEVER, that the option price per share of Common Stock purchasable upon exercise of an option granted under this Plan shall be 100% of the fair market value of a share of Common Stock on the date of grant of such option. For purposes hereof, "fair market value" shall be determined by the Committee. 11. STOCK OPTION PERIOD. Each stock option granted hereunder may be granted at any time on or after the effective date, and prior to the termination, of this Plan. The Committee shall determine whether such stock option shall become exercisable in cumulative or non-cumulative installments or in full at any time. An exercisable stock option may be exercised in whole or in part with respect to whole shares of Common Stock only. The period for the exercise of each stock option shall be determined by the Committee. 12. EXERCISE OF STOCK OPTIONS. (a) Upon exercise, the option price may be paid in cash, in shares of Common Stock having a fair market value on the date of exercise equal to the option price, or in a combination thereof. The Company may arrange or approve of a cashless option exercise procedure which complies with the provisions of Section 16 of the Exchange Act and the rules and regulations thereunder. (b) An option may be exercised during an optionee's continued employment with the Company or one of its subsidiaries, or service on the Board, as the case may be, and, except in the event of such optionee's death, within a period of 30 days following termination of such employment or service, but only to the extent exercisable and within the term of such option at the time of the termination of such employment or service; PROVIDED, HOWEVER, that if employment of the optionee by the Company or one of its subsidiaries or service on the Board shall have terminated by reason of retirement after age 60, then the option may be exercised within a period not in excess of one year following such termination of employment or service on the Board, but only to the extent exercisable and within the term of such option at the time of such termination of employment or service. (c) No option shall be transferable except that (1) in the event of the death of an optionee (i) during employment or service on the Board, as the case may be, (ii) within a period of one year after termination of employment or service on the Board, as the case may be, by reason of retirement after age 60 at a time when the option is otherwise exercisable or (iii) within 30 days after termination of employment or service on the Board, as the case may be, for any other reason, outstanding stock options may be exercised, but only to the extent exercisable and within the term of such option prior to the application of this Section 12, by the executor, administrator, personal representative, beneficiary or similar person of such deceased optionee within one year of the death of such optionee in the case of clauses (i) and (ii) or within 90 days of the death of such optionee in the case of clause (iii) and (2) the Committee may consent to the transfer or transferability of any particular option in the manner approved by the Committee. 13. ACCELERATION OF OPTIONS UPON A CHANGE IN CONTROL. The following provisions shall apply in the event of a "Change in Control": (a) In the event of a Change in Control, any stock options not previously exercisable in full shall become fully exercisable. (b) For purposes hereof, "Change in Control" means: (1) The acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 50% or more of the then outstanding shares of Common Stock (the "Outstanding Common Stock"); PROVIDED, HOWEVER, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition by the Company, (B) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (C) any acquisition by an underwriter or underwriters as part of a BONA FIDE public distribution of securities of the Company or (D) any acquisition by any Person which beneficially owned as of the effective date of this Plan, 30% or more of the outstanding Common Stock; and PROVIDED FURTHER that, for purposes of clause (A), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of 50% or more of the outstanding Common Stock by reason of an acquisition by the Company and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the Outstanding Common Stock and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control; (2) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; PROVIDED, HOWEVER, that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed to have been a member of the Incumbent Board; and PROVIDED FURTHER, that no individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall be deemed to have been a member of the Incumbent Board; (3) Approval by the shareholders of the Company of a reorganization, merger or consolidation unless, in any such case, immediately after such reorganization, merger or consolidation, (i) more than 50% of the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and more than 50% of the combined voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals or entities who were the beneficial owners, respectively, of the Outstanding Common Stock immediately prior to such reorganization, merger or consolidation and in substantially the same proportions relative to each other as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Common Stock, (ii) no Person (other than the Company, any employee plan (or related trust) sponsored or maintained by the Company or the corporation resulting from such reorganization, merger or consolidation (or any corporation controlled by the Company) and any Person which beneficially owned, immediately prior to such reorganization, merger or consolidation, directly or indirectly, 30% or more of the Outstanding Common Stock) beneficially owns, directly or indirectly, 50% or more of the then outstanding shares of common stock of such corporation or 50% or more of the combined voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) at least a majority of the members of the Board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such reorganization, merger or consolidation; or (4) Approval by the shareholders of the Company of (i) a plan of complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, immediately after such sale or other disposition, (A) more than 50% of the then outstanding shares of common stock thereof and more than 50% of the combined voting power of the then outstanding securities thereof entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Stock immediately prior to such sale or other disposition and in substantially the same proportions relative to each other as their ownership, immediately prior to such sale or other disposition, of the Outstanding Common Stock, (B) no Person (other than the Company, any employee benefit plan (or related trust) sponsored or maintained by the Company or such corporation (or any corporation controlled by the Company) and any Person which beneficially owned, immediately prior to such sale or other disposition, directly or indirectly, 30% or more of the Outstanding Company Common Stock) beneficially owns, directly or indirectly, 50% or more of the then outstanding shares of common stock thereof or 50% or more of the combined voting power of the then outstanding securities thereof entitled to vote generally in the election of directors and (C) at least a majority of the members of the Board of directors thereof were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition. EX-99.2 6 FORM OF STOCK OPTION AGREEMENTS LUNAR CORPORATION NON-QUALIFIED STOCK OPTION Lunar Corporation (the "Company") hereby irrevocably grants to ? (the "Employee") an option to purchase from time to time all or any part of a total of ? common shares of the Company, at a price of $? per share, upon the terms and conditions set forth below. This option is granted as of ? under the Lunar Corporation Amended and Restated Stock Option Plan (herein called the "Plan") in consideration for employee's agreement that any dispute with the company will be submitted exclusively to arbitration according to the procedure described in Attachment A hereto; and for the purpose of furnishing to the Employee an appropriate incentive to improve operations and increase profits, and encourage the Employee to continue employment with the Company and its subsidiaries. The terms and conditions of the option are as follows: 1. This option may, but need not, be exercised in installments, but may be exercised only to the extent, and within the time periods, described below. During the lifetime of the Employee, it may be exercised only by the Employee and (except as provided below) only while in the employ of the Company or any of its subsidiaries. 2. The option may be exercised only after one year following the granting date. Termination of employment in this one-year period will terminate all rights under the option. After one year from the granting date, one-fifth of the total number of shares covered by this option may be exercised; after two years from the granting date, two-fifths of the total number of shares covered by this option may be exercised; after three years from the granting date, three-fifths of the total number of shares covered by this option may be exercised; after four years from the granting date, four-fifths of the total number of shares covered by this option may be exercised; and after five years, this option shall be exercisable in full. The right to purchase shall cumulate so that shares may be purchased at any time after becoming eligible for purchase until termination of the option. 3. Notwithstanding the foregoing provisions of this paragraph 2, this option shall become fully exercisable in the event of a "Change in Control" of the Company. A Change in Control is more fully defined in the Plan Document, but includes: (i) The sale or other disposition by the Company of all or substantially all of its assets to a person, firm or other entity not controlling, controlled by or under common control with the Company; (ii) The sale or other disposition (including a merger or consolidation) of capital stock of the Company if, as a consequence thereof, capital stock representing more than 50% of the Company's total voting power is sold or disposed of, in one or a series of related transactions, to a person, firm or other entity not controlling, controlled by, or under common control with the Company. 4. If employment with the Company terminates at a time when the Employee is entitled to exercise all or a part of the option, for any reason other than death, the option shall expire as of thirty (30) days after written notice of termination; provided that if the termination of employment is by reason of retirement (under a pension or retirement plan of the Company or subsidiary), this option may be exercised by the Employee within twelve months after the date of retirement but only to the extent exercisable on said date of retirement. A leave of absence approved in writing by the Human Resources Manager and the President shall not be termination of employment for purposes of the Plan. 5. In the event of death of the Employee during employment or after retirement at a time when this option is otherwise exercisable, the option may be exercised within twelve months after such death, and only: a. By the executor or administrator of the estate of the Employee or the person or persons to whom rights under the option have passed by will or the laws of descent and distribution; and b. To the extent that the Employee was entitled to do so at the date of death. 6. The option may not, under any circumstances, be exercised after expiration of ten (10) years from the granting date. 7. No fractional share may be purchased under this option except in combination with a fraction or fractions under another option or options granted under the Program, and then only to the extent that such combination equals a full share. 8. Nothing herein confers upon the Employee any right to continue in the employ of the Company or of any subsidiary. 9. This option shall not be transferable or assignable, in whole or in part, except (a) by will or by the laws of descent and distribution or (b) as may be approved by the Committee. Subject to the foregoing, this option may not be assigned, transferred (except as aforesaid), pledged, or hypothecated in any way, whether by operation of law or otherwise, and shall not be subject to execution, attachment, or similar process. Any attempt at assignment, transfer, pledge, hypothecation, or other disposition of this option contrary to the provisions hereof, and the levy of any attachment or similar process upon this option, shall be null and void and without effect. 10. The shares of common stock issuable to Optionee upon exercise of this option ("Option Stock") are expressly subject to the terms of the Bylaws of the corporation as may be amended by the Shareholders from time to time. No transfer of Option Stock may be made except in accordance with the provisions of the Bylaws. By accepting this option, Optionee hereby agrees that, as an express condition to receiving shares of common stock issuable upon exercise of this option, Optionee and his spouse will execute whatever documents the Company requires so as to bind the Optionee and his spouse, and the shares of common stock issuable upon exercise of this option, to the terms of the Bylaws. 11. All terms and conditions of this option agreement are subject to and shall be interpreted according to the terms of the Lunar Corporation Amended and Restated Stock Option Plan (attached hereto). 12. Prior to the exercise of this option and as a condition to the Company's obligation to deliver shares upon such exercise, the Optionee shall make arrangements satisfactory to the Company for the payment of any applicable federal or other withholding taxes payable as a result thereof. 13. The option may be exercised only by delivering to the Secretary or other designated employee of the Company a written notice of exercise, specifying the number of common shares with respect to which the option is then being exercised, and accompanied by payment of the full purchase price of the shares being purchased in cash, or by the surrender of other common shares of the Company held by the Employee having a then fair market value equal to the purchase price, or a combination thereof, plus payment in cash of the full amount of any taxes which the Company believes are required to be withheld and paid with respect to such exercise, and in the event the option is being exercised by a person or persons other than the Employee, such appropriate tax clearance, proof of the right of such person or persons to exercise the option, and other pertinent data as the Company may deem necessary. 14. The Company shall issue a certificate or certificates for shares purchased upon exercise of the option; however, the Company shall not be required to issue or deliver any certificate for shares purchased pending compliance with all applicable federal and state securities and other laws (including any registration requirements) and compliance with rules and practices of any stock exchange upon which the Company's common shares are listed. 15. In the event that there is any change in the number of issued common shares of the Company without new consideration to the Company (such as by stock dividends or stock split-ups), then (i) the number of shares at the time unexercised under this option shall be changed in proportion to such change in issued shares; and (ii) the option price for the unexercised portion of the option granted shall be adjusted so that the aggregate consideration payable to the Company upon the purchase of all shares not theretofore purchased shall not be changed. If the outstanding common shares of the Company shall be combined, or be changed into another kind of stock of the Company or into securities of another corporation, whether through recapitalization, reorganization, sale, merger, consolidation, etc., the Company shall cause adequate provision to be made whereby the person or persons entitled to exercise this option shall thereafter be entitled to receive, upon due exercise of any portion of the option, the securities equivalent to those which that person would have been entitled to receive for common shares acquired through exercise of the same portion of such option immediately prior to the effective date of such recapitalization, reorganization, sale, merger, consolidation, etc. If appropriate, due adjustment shall be made in the per-share or per-unit price of the securities purchased on exercise of this option following said recapitalization, reorganization, sale, merger, consolidation, etc. 16. Upon written request, the Company agrees to furnish the Optionee a copy of its annual financial statements within 120 days after the end of each fiscal year. 17. Neither this option, shares issued upon its exercise, any excess of market value over option price, nor any other rights, benefits, values, or interest resulting from the granting of this option shall be considered as compensation for purposes of any pension or retirement plan, insurance plan, investment or stock purchase plan, or any other employee benefit plan of the Company or any of its subsidiaries. 18. Every notice or other communication relating to this Agreement shall be in writing and shall be mailed to or delivered to the party for whom it is intended in each case properly addressed, if to the Company at its principal place of business, Attention: Corporate President, or if mailed or delivered to the Optionee at his address set forth below his signature to this Agreement (or to such other address as may hereafter be designated in writing by either party to this Agreement to the other). IN WITNESS WHEREOF, the Company has caused this option to be executed by its duly authorized officers as of the granting date above set forth. _________________________________________________ President and Date Chief Executive Officer _________________________________________________ Attest _________________________________________________ Secretary Date _________________________________________________ Optionee: Date Address: -----END PRIVACY-ENHANCED MESSAGE-----